The pandemic has been devastating to American businesses, but many entrepreneurs are seeing an opportunity, with business applications up more than 10% over 2019.
SCOTT SIMON, HOST:
Times are tough for small businesses, but WHYY’s Miles Bryan has a story on new businesses that have sprung up.
MILES BRYAN, BYLINE: Derwood Selby got laid off from his job as a food and beverage supervisor at a hotel in Philly back in March.
DERWOOD SELBY: So I started sweating. Like, how the heck am I going to get some money?
BRYAN: Selby was entering into Pennsylvania’s worst labor market since the Great Depression. Getting another job would be tough. But at least for a while, he had a cushion. Selby’s unemployment benefits included an extra 600 a week from the federal government, which covered his expenses. He even started to save a little.
SELBY: When the six came, it was kind of like, cool, this works.
BRYAN: Selby had always wanted to start something of his own, so instead of looking for a job, he enrolled in a small-business class. Now he’s launching a venture to sell produce and a specialty line of olive oil and balsamic vinegars at local farmers markets. He’s calling it Selby Signature.
SELBY: When COVID hit and I got out, I said, well, maybe this is my chance now to say, let me get my own, be my own boss.
BRYAN: There are a lot more Derwood Selbys than you might think. Nationwide, business formation is up nearly 20% year over year, according to census data. Many of those new businesses are people moving to self-employment. That fact is not super surprising, says Kenan Fikri. He’s research director at the Economic Innovation Group.
KENAN FIKRI: With every recession, kind of self-employment rises. Someone gets laid off. It’s harder to find a new job in a recession. It’s easier to hang a shingle and try to start your own business.
BRYAN: What is surprising is that a lot of today’s would-be businesses are planning to eventually hire employees. Compare that to the Great Recession, when the number of new businesses planning to make hires collapsed and stayed low for years.
Fikri says there’s a couple of things that make this recession different. For one, before the economy blew up, it had been strong for about a decade.
FIKRI: A lot of people were sitting on what could be a nice cushion with which to start a new business.
BRYAN: Second, home values just keep rising, giving homeowners a line of credit they can use if they want to try something new. And finally, many would-be entrepreneurs look at the pandemic’s destruction of our daily life and see an opportunity for new ideas.
Convincing lenders to share that optimism is a tough sell right now. Maura Shenker is the head of the Small Business Development Center at Temple University in Philadelphia.
MAURA SHENKER: When the economy is not good and business is not booming, banks do not risk the limited capital they have right now on startups.
BRYAN: Derwood Selby hasn’t tried to get a loan yet. Instead, he’s borrowed some money from friends and family. Recently, he held the soft launch of Selby Signature groceries at a farmers market in North Philly.
SELBY: We got avocado, tomato. We got green bananas.
BRYAN: How’s it been going? Are you making any sales?
SELBY: I am actually making money. Can I say that on the radio?
BRYAN: Selby says whatever else happens, he hopes this pandemic change is permanent.
For NPR News, I’m Miles Bryan in Philadelphia.
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